Q3 2023 Lizhi Inc Earnings Call

November 30, 2023

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Speaker 1: Hello ladies and gentlemen, thank you for standing by for Li Zhi Inc's 3rd Quarter 2023 Earnings Conference Call

Hello, Ladies and gentlemen, and thank you for standing by for <unk>, Inc. Third quarter 2023 earnings Conference call.

Speaker 1: Please note, all participants are in listen-only mode now, and today's conference call is being recorded.

Please note all participants are in listen only mode now and today's conference call is being recorded.

Speaker 1: I'm now going to call over to your host, Effie Kong, head of capital markets, Food Company. Please go ahead.

I'll now turn the call over to your host Effie Coke head of capital markets for the company. Please go head.

Speaker 2: Thank you very much. Hello everyone and welcome to the third quarter 2023 Ernest Conference call. We released our financial and operating results via NewsWire services earlier today and they are available online. Participants on today's call will include our founder and CEO Mr. Marco Leye and our acting staff for Mr. Van Lu.

Thank you very much Hello, everyone and welcome to D to Inc's third quarter 'twenty to 'twenty three on these conference call, where at least dollar financial and operating results. We are newswire services earlier today and they are available online.

He spends on today's call will include our founder and CEO, Mr. Mark who lives and our acting CFO Ms Cheung Fondue.

Speaker 2: Management will begin with prepared remarks, introducing business development and financial performance in the third quarter. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the IR section of our website at ir.litch.fm.

Management will begin with prepared remarks, introducing business development and financial performance in the third quarter.

As a reminder, this conference is being recorded.

Dishes webcast a replay of this conference call will be available on the IR section of our website at IR I'll beat you don't have them.

Speaker 2: Before we continue, please note that today's discussions will contain forward-looking statements made under the safe harbor provisions of the US private secretive litigation reform act of 1995. These statements technically contain words such as may, will expect, target, estimate, intent, believe, potential, continue, or other similar expressions.

Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 days.

These statements type Coty contend words, such as May will expect target estimate intend believe potential continue or other similar expressions.

Speaker 2: Overlooking statements involving inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ maturity from those projected or anticipated, many of which factors are beyond our control.

We're looking statements involve inherent risks and uncertainties.

These statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated many of which factors are beyond our control.

Speaker 2: The company is affiliated with the advisory representatives, and the underwriters do not undertake any obligations to update this forward-looking information, except as required under the applicable law.

The company is a village advisors roughly its anti terrorism and underwriters do not undertake any obligation to update these forward looking information, except as required under the applicable law.

Speaker 2: Please also note that Li Zhi's earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Please refer to Li Zhi's earnings press release for a reconciliation of unaudited non-GAAP measures to unaudited GAAP measures. I will now turn the call over to our founder and CEO , Mr. Marco Lai. Please go ahead.

Please also note that leaches unused press release and this conference call include discussions of unaudited GAAP financial measures as well as an audited non-GAAP financial measures. Please refer to leeches. The earnings press release for a reconciliation of non-GAAP measures to Oh.

GAAP measures.

I will now turn the call over to our founder and CEO Mr. Michael <unk>. Please go ahead.

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Speaker 2: Hello everyone, thank you for joining me to the third quarter, 2023 Ernest Conference call.

Hello, everyone. Thank you for joining Leach, Inc. Third quarter 2023 earnings conference call.

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Speaker 3: Next, I will introduce the specific situation of the three-quarter business development.

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In the third quarter of 'twenty to 'twenty three we further strengthen the execution of our online audio century globalization strategy.

Speaker 2: In the third quarter of 2023, we further strengthen the execution of our online audio-centric globalization strategy, leveraging our long-term technological assets. We consistently empower the domestic business innovation while steadily advancing our global business, fostering a vibrant and diversified ecosystem. In the third quarter of 2023, our revenue will reach the RMB 425 million.

Reaching our long term technology called assets, we consistently empower the domestic business innovation, while steadily advancing our global business fostering a vibrant and diversified ecosystem in the third quarter of 2023, our revenue reached RMB 425 million.

Speaker 2: Our total average mobile MAU is a amounted to 42.1 million. And our average monthly paying users totaled 400 to 0.6 thousand.

Our total average mobile I mean use amounted to $42 1 million and all average monthly paying users totaled 400 to 6000.

Speaker 2: Despite macro headwinds, we steadfastly pursued the course we had charted, reinforcing our commitment to our long-term vision. During the quarter, we continued to reduce costs and increase operating efficiency to improve organizational efficiency and agility, while also reinforcing our globalization capabilities to better support the development of our diverse spectrum of businesses.

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We steadfastly pursued the cost we had charted reinforcing our commitment to our long term vision during the quarter, we continued to reduce cost and increase operating efficiency to improve organizational efficiency and agility, while also reinforcing our globalization capabilities too.

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Speaker 2: Now let me go over our business developments during the third quarter.

Now let me go over our business developments during the third quarter.

Speaker 3: In terms of audio and video entertainment business, we are committed to creating a healthy and sustainable product ecosystem.

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Speaker 3: to improve the scale and quality of the creators to enhance the competitiveness of the platform.

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Speaker 3: In addition to the continuous optimization of content creators' platforms,

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Speaker 3: We have launched activities such as the Starlight Challenge. We have given support to the content creators of the Central Standing Committee. We have given motivation to the content creators of the Headquarters. We have helped the content creators to show their unique voice.

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Speaker 3: It not only stimulated their creativity and enthusiasm, but also enhanced the platform's attraction to content creators.

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In terms of our arguing that timber business, we remain committed to building a healthy and a sustainable product ecosystem.

Speaker 2: In terms of our audio entertainment business, we remain committed to building a healthy and sustainable product ecosystem through proactive optimization of our operating strategies and meticulous refinement of our mechanisms for expanding and nurturing our content creator base. We have enhanced the creator quality and increased the scale of our creator base while also solidifying our platform's competitive edges.

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Speaker 2: During the quarter, in addition to the continuous optimization of our content creator platform, we launched the Starlight Challenge, a strategic initiative designed to cultivate mid and long-tail content creators and motivate our top-tier contributors.

During the quarter. In addition to the continuous optimization of our content creator platform, we launched the dose the Allied kept challenge our strategic our strategic initiative designed to acculturate meat and the long tail content creators and motivates our top tier contributors.

Speaker 2: This program empowers content creators to showcase their distinctive vocal talents for unlocking their creative potential, while also elevating the platform's appeal to the content creator community.

This program empowers the content creators to showcase their distinctive vocal talents for the unlocking their creative potential while also elevating the pass on appeal to the content creator community.

Speaker 3: In addition, through the expansion of content types and the innovation of products, we can improve the user experience and attract more users.

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Speaker 3: In this quarter, based on user preferences, we have launched a wide selection of selected modules and rich content categories to provide users with a more diversified sharing of content.

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Speaker 3: In addition, we have continued to update and update the product design based on the characteristics of the platform, developed new product features and interactive tools,

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Speaker 3: Combining the applications of cutting-edge technology to create innovative audio-visual-interactive entertainment.

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Speaker 2: In addition, we strive to improve the user experience and attract more high-quality users through enriched content offerings and product innovation.

In addition, we strove to improve the user experience and attract more high quality users through enrich the content offerings and product innovations during the quarter based on user preferences, we add to the suite of carefully curated modules to enrich our content to Argos.

Speaker 2: During the quarter, based on user preferences, we added a suite of carefully curated modules to enrich our content genres, providing our users with more diverse and engaging content options. Furthermore, we continue to iterate our product design and cultivate new product features and engagement tools, harnessing cutting-edge technologies to introduce innovative audio-based interaction experiences.

Providing our users with more diverse engaging content options. Furthermore, we continue to iterate, our product design and coach with new product features and engagement tools harnessing cutting edge technologies to introduce innovative audio based interaction experiences we still stand.

Speaker 2: We sustained active user participation through a diverse area of marketing programs and to the events augmenting both user thickness and engagement.

Active user participation through a diverse area of marketing programs and things events augmenting both user stickiness and engagement.

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Speaker 3: to better meet the needs of users. At the same time, we are also committed to enhancing the network effect of the product

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Speaker 3: In addition to continuously improving the localization ability of products and operations in many aspects, we have established a product innovation mechanism for multiple teams to participate in.

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Speaker 3: to strengthen the globalization capabilities and accelerate the globalization process.

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Speaker 2: As for our global innovative business, we are deeply invested in delighting our users with next-generation social networking products.

As for our global Innerwear business, we are deeply invested in July to our users with naphtha generation social networking product by integrating advanced features including cross device functionality real time capabilities AIG C Technologies' anymore. We.

Speaker 2: by integrating the vast features, including cross-device functionality, real-time capabilities, AIGC technologies, and more, we continue to refine our product interface and functionality.

Continuing to refine our product interface and functionality, we leverage advanced technologies to empower product innovation Catherine two diverse user needs. Meanwhile, we in Denver treating ship user.

Speaker 2: We leverage advanced technologies to empower portal innovation, catering to diverse user needs. Meanwhile, we endeavor to ensure user engagement by enhancing the network effect of our offerings, thereby fostering organic.

User engagement by enhancing the network effect of our offerings, thereby fostering organic user growth.

Speaker 2: organizational-wise as we continue to boost our localization capabilities across product development, operations, and other key areas.

I'll get organizational wise as we continue to boost our localization capabilities across product development operations and the other key areas. We have also taken a collaborative cross team approach to product innovation to increase innovative productivity moving forward.

Speaker 2: We have also taken a collaborative cross team approach.

Speaker 2: product innovation to increase innovative productivity. Moving forward, we will continue developing international markets.

We will continue developing international markets, reinforcing globalization capabilities and ultimately accelerating the expansion of our global footprint.

Speaker 2: reinforcing globalization capabilities and ultimately accelerating the extension of our global footprint.

Speaker 3: In terms of technical development, we continue to strengthen our core technology.

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Speaker 3: Smart data analysis and data management systems applied AI technology in the fields of market marketing effectively promote overall efficiency. As a whole, we...

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Speaker 3: constantly enhancing the core technical capacity and development of the computation group.

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With respect to a technological advancement, we continue to strengthen our R&D capabilities to provide more customized product supports these in turn empowers product innovation and drive progress across our global business. We have also consistently.

Speaker 2: With respect to technological advancement, we continue to strengthen our R&D capabilities to provide more customized product support. This in turn empowers product innovation and drives progress across our global business. We have also consistently depended the integration and development of multi-model AIGC technologies into our innovative business framework.

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Speaker 2: Through motion-enhanced model training and algorithm optimization, we are fortifying our AI assets, unlocking vast opportunities for ongoing product innovation. On voice technologies, we have been constantly improving the stability and performance of automatic speech recognition and text-to-speech ASR and TTS for both Chinese and English languages.

Three motion has the motto training and the algorithm optimization, we are quantifying our AI SaaS unlocking vast opportunities for ongoing product innovation.

<unk> technologies, we have been constantly improving the stability and performance of automatic speech recognition and text to speech ASI in TTS for both Chinese and English languages.

Speaker 2: adapting them for diverse scenarios. We have also achieved a breakthrough in AI voice changing technology, including a seamless integration to.reme, our in-house RTC platform for real-time audio and video streaming.

Adapting them for diverse scenarios, we have also shifted our breakthroughs in AI voice changing technology, including seamless integration to Remy our in house RTC platform for real time audio and video streaming in the meantime, we further enhanced the quality of information.

Speaker 2: In the meantime, we further enhance the quality of the information transmission on our IM platform VoterX, empowering our business with high performance, low latency, and scalable, customize the instant messaging capabilities.

Destination on our I am pass on border acts empowering our business with high performance low latency and scalable customize the instant messaging capabilities.

In terms of I wasn't Tayo technology path on the construction, we further improved the data analytics and data management systems and applied AI technology to marketing and other fields collectively these initiatives have improved overall operating efficiency in general we believe technology.

Speaker 2: in terms of our worth of higher technology platform construction. We further improved the data analytics and data management systems and applied AI technology to marketing and other fields.

Speaker 2: Classively, this initiative has been proved overall operating efficiency. In general, we believe technological advancements are the cornerstone of business development.

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Speaker 2: We remain committed to pursuing industry leading technological standards and continuing fortifying our core technological capabilities to empower the

We remain committed to pursuing industry, leading technological standards and continually fortifying our core technological capabilities to empower the business development.

Speaker 3: We are very happy to announce that last month, our company has

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Speaker 3: At the same time, we will also refine operations to improve the feasibility of resource configuration and contribute more to the company's long-term sustainable development.

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Speaker 2: We are delighted to announce that last month, the company was lauded as one of China's top 100 Internet companies by the Internet Society of China. This marks the fifth consecutive year that we have received this honor, representing powerful recognition of our comprehensive capabilities by the Internet Society of China and the broader industry.

We are delighted to announce that last month the company with a lot of it as one of China's top 100 Internet companies by the Internet Society of China.

This marks the fifth consecutive year that we have received this honor.

<unk> powerful recognition of our comprehensive capabilities by the Internet Society of China, and the broader industry.

Speaker 2: Going forward, despite macro challenges, we will spare no effort to improve actively refining our business strategies and building a more competitive ecosystem. We will continue to improve our core technology to the villages while also adopting and more deep into grading AIGC and voice AI technologies throughout the business.

Going forward. Despite the macro challenges, we will spare no effort in pro actively refining our business strategies and building a more competitive ecosystem. We will continue to improve our core technology capabilities, while also adopting and more deeply integrating AIG C and <unk>.

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Speaker 2: Meanwhile, we will further streamline our operations and improve the effectiveness of resource allocation, propelling the communist launch and sustainable development with fresh momentum.

Meanwhile, we will further streamline our operations and improve the effectiveness of resourceful location propelling the company's long term sustainability brooklyn's with fresh momentum.

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Thank you all with that I will now turn the call over to our acting CFO Ms. Shang Fang Liu who will discuss our financial results for me more detail.

Speaker 2: Thank you all. With that, I will now turn the call over to our Acting CFO , Ms. Chen Fanglu, who will discuss our financial results in more detail.

Speaker 4: Okay, thank you, Marco. And hello, everyone. Online revenues in the third quarter of 2023 will be 425.1 million.

Okay. Thank you, Michael and Hello, everyone I'll, let revenues in the third quarter of 2023, where befall Hunter and $25 1 million. Despite the complex backdrop and market uncertainties that protected we remain steadfast in strengthening our core competitiveness through technological innovation.

Speaker 4: Despite the complex backdrop and market uncertainties that persisted, we remained steadfast in strengthening our core competitiveness through technological innovation during the quarter.

The quarter.

Speaker 4: Moving forward, we remain committed to further enhancing organizational efficiency, developing globalization capability, and enhancing overall agility, positioning us to deliver enduring value to our stakeholders.

Moving forward, we remain committed to for the.

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Overall agility position us to deliver enduring value to all stakeholders.

Speaker 4: Now I'd like to provide a brief overview of our financial results for the third quarter of 2023.

Now I'd like to provide a brief overview of our financial results for the third quarter of 2023.

Speaker 4: In this quarter, our total net revenues will be $425.1 million, compared with $565.2 million in the same period of last year.

In this quarter. Our total net revenues were RMB $425 1 million compared with RMB $565 2 million in the same period of last year.

Speaker 4: primarily due to the decline in average pain users and user spending on our audio entertainment products.

Primarily due to the decline in average paying users and user spending or audio entertainment products.

Speaker 4: Cost of revenue was RMB317.3 million in next quarter, compared with RMB376.2 million in the same period of last year, mainly attributable to the decreased revenue sharing fees, share-based compensation expenses, payment handling costs, and other miscellaneous costs.

Cost of revenue was RMB $317 3 million like in this quarter compared with RMB $376 2 million in the center of last year.

Mainly attributable to the decreased revenue share of fees share based compensation expenses pay my hand on costs and other miscellaneous costs.

Gross profit was RMB 107, 8 million in the third quarter up 23, three compared with RMB $189 1 million in the same period of last year.

Speaker 4: Girls' property was R&B 107.8 million, Mr. Collab 23. Compare with R&B 118.1 million in the same period of last year.

Speaker 4: Long-Gap Gross Profit was RMB107.9 million in this quarter compared with RMB190.8 million in the same period of last year.

non-GAAP gross profit was RMB 107 point laminates in this quarter compared with RMB 111.8 minutes in the same period of last year.

Gross margin in this quarter of 2033 was 25 compared with 33% for all of last year lock up gross margin in this quarter was 25% copper was 34% in the center of last year.

Speaker 4: Gross margin in this quarter of 2023 was 25, compared with 33% in the same period of last year. Long gap gross margin in this quarter was 25%, compared with 34% in the same period of last year.

Speaker 4: Operating expenses were R&B 100 at 57.5 minutes in the third quarter of 2023. Compare was R&B 100 at 76.6 million in the same period of last year.

Operating expenses were RMB 167 point laminates in the third quarter of 2023, compared with RMB Weyerhaeuser at $56 6 million in the center of last year.

Speaker 4: Research and development expenses were RMB 83.8 million in the third quarter of 2023, representing an increase of 7% year-over-year, primarily due to the increased salary and welfare benefits expenses related to increased severance pay to optimize the R&D efficiency.

Research and development expenses were RMB.

$83 8 million late in the third quarter of 2023, representing an increase of 7% year over year.

Primarily due to the increase in salary and welfare benefits expenses.

Two increased severance pay to optimize the R&D efficiency.

Speaker 4: Partially offset by the decreased expenses related to research and development services provided by third parties.

Partially offset by the decrease expenses related to research and development services provided by third parties.

Speaker 4: SLA and McLean's premises were armed with 159.1 million in Miss Gordon. Compare with armed with 71.2 million in a sample of last year.

Selling and marketing expenses were RMB $59 1 million in this quarter compared with RMB $71 2 million you know scepter of last year.

Speaker 4: Primary attributable to decreased branding and marketing spread.

Primarily attributable to decreased branding and marketing expenses.

Speaker 4: The company will monitor its discretionary advertising and promotion expenses and adjust the quality depending on marketing conditions.

The company will monitor it discretionary advertising and promotion expenses.

To coordinate depending on market conditions.

General and administrative expenses were RMB 25, 1 million in the third quarter of 2023, compared with RMB $207 1 million in the center of Atlassian.

Speaker 4: General and administrative expenses were on B25.1 million in the third quarter of 2023. Complaned with on B27.1 million in the same period of last.

Many driven by decreased professional service fees provided by third parties provision for litigation contingencies and other miscellaneous expenses.

Speaker 4: Many driven by decreased professional service fees provided by third parties, pro-wasion for litigation contingencies, and other mental illness experts.

Operating loss was RMB 54 to one minute so quite of a 2023 compared with operating income of RMB 12.5 minutes in the center of last year.

Speaker 4: Operation loss was R&B 60.1 billion in the cell call of 2023. Compare with operating income of R&B 12.5 million in the same period of last year.

Speaker 4: Lungcap operating loss was RMB 55 million in this quarter. Compare with Lungcap operating income of RMB 20.2 million in the same period of last year.

non-GAAP operating operating loss was RMB 55 million in this quarter compared with non-GAAP operating income of RMB 22 million in the center of last year.

Other expenses will be five point laminate, so caught up to new phase III compared with other income of RMB 1.7 minutes in the center of that.

Speaker 4: Other expenses will be 5.5 million in a third quarter of 2023, compared with other income of R&B 1.7 million in the sample of last year. Many attributes go to the remuneration fees to the depositives back, in relation to the ratio change of ADF, September 20, 2023.

Attributable to the remuneration phase two the positive back in really in relation to the ratio change of 80 S. On September 22023.

The loss was RMB 62 midnight in the so called out of 2023.

Speaker 4: The last was RMB 62 million in a third quarter of 2023. Compare with the income of RMB 19.82 million in the sample of last year.

With net income of RMB 19, 8 million in the center of Latvia.

Speaker 4: Long gap net loss was RMB56.7 million in this quarter compared with long gap net income of RMB27.5 million in the same period of last quarter.

non-GAAP net loss was RMB $56 7 million in this quarter compared with non-GAAP net income of RMB 27, five data center of Lafayette.

Speaker 4: Basic and diluted land loss per ADS were both 11.01 Minister of Court of 2023. Compare with basic and diluted land income of R&D 3.81 and 3.79 per ADS in the center of La.

Basic and diluted net loss per ads were both 11 ports that are what they are so caught up 23, three compared with basic and diluted net income of RMB three one and three point 70 Library. If you asked me in the center of last year.

Speaker 4: Lung Gap Basin and Diluting Lane Loss per ADS were both RMB10.07 in the third quarter of 2023, compared with Lung Gap Basin and Diluting Lane Income of RMB5.29 and 5.26 per ADS in the same period of last year.

non-GAAP basic and diluted net loss per ads were both RMB 10 point there are seven in the third quarter of 2023, coupled with non-GAAP basic and diluted net income be five points to 29, five plastics for Adi in the center of last year.

Speaker 4: As of September 30, 2023, we have cash and cash equivalents, and we've shifted cash of R&B 6 counter at 15.8 million.

As of September 32023, we had cash and cash equivalents and restricted cash of RMB six counter at $15 8 million.

Speaker 4: Okay, this concludes all of our prepared remarks.

Okay. This concludes all of our prepared remarks.

Speaker 4: Thank you once again for joining us today. If you have further questions, please be afraid to contact these investor relations through the content information provided on our website I add or list to FM or Piancess Financial Communication.

Thank you once again for joining US today. If you have further questions. Please feel free to contact <unk> Investor relations through the contact information provided on our website I accolades don't have them off the author financial communications.

Thank you. This concludes the conference call you May now disconnect. Your lines. Thank you have a good day.

Speaker 1: Thank you. This concludes the conference call. You may now disconnect your line. Thank you. Have a good day.

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Speaker 1: Hello, ladies and gentlemen. Thank you for standing by for Li Zhi Ying's third quarter 2023 earnings conference call.

Hello, Ladies and gentlemen, thank you for standing by for <unk>, Inc. Third quarter, two tell them twenty-three earnings conference call. Please.

Speaker 1: Please note, all participants are in listen only mode now and today's conference call is being recorded.

Please note all participants are in listen only mode now and today's conference call is being recorded.

Speaker 1: I now turn the call over to your host, Effie Kong, Head of Capital Markets for the company. Please go ahead.

I'll now turn the call over to your host Effie call head of capital market Food Company. Please go ahead.

Speaker 2: Thank you very much. Hello, everyone, and welcome to Liji Inc.'s third quarter 2023 earnings conference call. We released our financial and operating results via Newswire services earlier today, and they are available online. Participants on today's call will include our founder and CEO , Mr. Marco Lai, and our acting CFO , Ms. Chen Fanglu.

Thank you very much Hello, everyone and welcome to <unk>, Inc. Third quarter 2020, iterate on these conference call, where these dollar financial and operating results beyond Newswire services earlier today and available online participants.

Participants on today's call will include our founder and CEO, Mr. Michael lives and our acting CFO Ms Ching volatile.

Speaker 2: Management will begin with prepared remarks introducing business development and financial performance in the third quarter. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the IR section of our website at ir.leach.fm.

Management will begin with prepared remarks, introducing business development and our financial performance in the third quarter.

As a reminder, this conference is being recorded in addition, a webcast a replay of this conference call will be available on the IR section of our website at IR target you don't have them.

Speaker 2: Before we continue, please note that today's discussions will contain overlooking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements technically contain words such as may, will, expect, target, estimate, intend, believe, potential, continue or other similar expressions.

Before we can change. Please note that today's discussions will contain forward looking statements made under the safe Harbor provisions of the U S. Private so creative litigation Reform Act of Nike and occupied.

These statements actually contain words, such as May will expect target estimate intend believe potential continue or other similar expressions.

Speaker 2: For overlooking statements involving heavy risks and uncertainties, the accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which factors are beyond our control.

Forward looking statements involve inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated many of which factors are beyond our control the company.

Speaker 2: The company, its affiliates, advisors, representatives, and underwriters do not undertake any obligation to update this forward-looking information except as required under the applicable law.

<unk> is a village advisor representatives and underwriters do not undertake any obligation to update these forward looking information, except as required under the applicable law.

Speaker 2: Please also note that Li Zhi's earnings press release and this conference call include discussions of unaudited GAAP financial measures, as well as unaudited non-GAAP financial measures. Please refer to Li Zhi's earnings press release for a reconsideration of unaudited non-GAAP measures to unaudited GAAP measures. I will now turn the call over to our founder and CEO , Mr. Marco Lai. Please go ahead.

Please also note that leads this unused press release and this conference call include discussions of unaudited GAAP financial measures as well as an audited non-GAAP financial measures. Please refer to the inches earnings press release for a reconciliation of our audited non-GAAP measures to our.

<unk> GAAP measures.

I will now turn the call over to our founder and CEO based on Mako Lai. Please go ahead.

Speaker 3: Hello, everyone. Thank you for attending Lucy's 3rd quarter sales conference in 2023.

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Speaker 2: Hello everyone, thank you for joining me, pre-installed quarter-twenty-twenty-three Ernest Conference call.

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Speaker 3: In the third quarter of 2023, we will continue to deepen our global development strategy centered on audio and video, take advantage of long-term technology reserves, continue to boost domestic business innovation, steadily promote global business development, and build a diversified business ecosystem.

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Speaker 3: These scy two woman cle So way. So they are we, U and and B.

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Speaker 3: The total number of active users of Yidongduan is 42,100,000. The total number of non-active users of Yuejun is...

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Speaker 3: Despite the many challenges facing the macroeconomic environment.

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Speaker 3: In this quarter, we will continue to work to improve the efficiency and flexibility of the organization.

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Speaker 3: At the same time, we should promote globalization and better support the development of multidimensional business.

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Speaker 3: Next, I will introduce the specific situation of the three-quarter business development.

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In the third quarter of 'twenty to 'twenty three we further strengthen the execution of our online audio centric globalization strategy leveraging our long term technology core assets, we consistently empower the domestic business innovation, while steadily advancing our global business Foster.

We're in a vibrant and a diversified ecosystem in the third quarter of 2023, our revenue reached RMB 425 million. Our total average mobile meus amounted to $42 1 million and all average monthly paying users totaled 400 to 6000.

Speaker 2: Our total average mobile MAUs amounted to 42.1 million and our average monthly paying users totaled 402.6 thousand.

Despite macro housings, we started.

We steadfastly pursued the cost we had charted reinforcing our commitment to our long term region. During the quarter, we continued to reduce cost and increase operating efficiency to improve organizational efficiency and agility, while also reinforcing our globalization capabilities too.

Bachelor support the development of our diverse spectrum of businesses.

Now let me go over our business developments during the third quarter.

Speaker 2: Now let me go over our business developments during the third quarter.

Speaker 3: In terms of audio and video entertainment business, we are committed to creating a healthy and sustainable product ecosystem.

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Speaker 3: to improve the scale and quality of the creators to enhance the competitiveness of the platform.

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Speaker 3: In addition to the continuous optimization of content creators' platforms,

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Speaker 3: It further stimulated their creativity and potential, and enhanced the platform's attraction to content creators.

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In terms of our audio entertainment business, we remain committed to building a healthy and a sustainable product ecosystem through proactive optimization of our operating strategies and the meticulous refinement of our mechanisms for expanding in a nurturing our content.

Base, we have enhanced the equator quality and increase the scale of our creator base, while also solidifying our platform's competitive edges.

During the quarter. In addition to the continuous optimization of our content creator platform. We launched the does the Allied kept challenge a static a strategic initiative designed to acculturate meet in the long tail content creators and motivates our top tier contributors.

Speaker 2: This program empowered content creators to showcase their distinct vocal talents for the unlocking their creative potential, while also elevating the platform's appeal to the content creator community.

This program empowered the content creators to showcase their distinctive local talents for the unlocking their creative potential while also elevating the platform to appeal to the content creator community.

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Speaker 3: In this quarter, based on user preferences, we have launched a variety of selection modules and rich content categories to provide users with a more diversified sharing of content.

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Speaker 3: In addition, based on the characteristics of the platform, we have continued to update and update the product design and developed new product features and interactive tools.

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Speaker 3: Combining the applications of cutting-edge technology to create innovative audio-visual-interactive entertainment.

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Speaker 3: And through rich operation activities and thematic events, it has attracted more users to join, further strengthening users' versatility and bloodline

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Speaker 2: In addition, we strive to improve the user experience and attract more high-quality users through enriched content offerings and product innovation.

In addition, we strove to improve the user experience and attract more high quality users through enrich the content offerings and product innovations.

During the quarter based on user preferences, we add to the suite of carefully curated modules to enrich our content drag Ross, providing our users with more diverse engaging content options. Furthermore, we continue to iterate our product design and coach with new product features an engagement tool.

Those harnessing cutting edge technologies to introduce innovative audio based interaction experiences.

Speaker 2: We sustain active user participation through a diverse array of marketing programs and themed events, augmenting both user stickiness and engagement.

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Speaker 3: and combines the features of multi-end-to-end AIGC.

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Speaker 3: and continue to optimize the functional form of the product through the innovation of front-end technology-enabled products.

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Speaker 3: better meet the needs of users. At the same time, we are also committed to improving the network effect of products.

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Speaker 3: We will continue to expand our overseas market in the future.

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Speaker 3: to strengthen the globalization capabilities and accelerate the globalization layout.

As for our global in the wage business. We are deeply invested in July to our users with naphtha generation social networking products by integrating advanced features including cross device functionality real time capabilities Aig's AI technologies anymore. We continue.

Speaker 2: As for our global innovative business, we are deeply invested in delighting our users with next-generation social networking products.

Speaker 2: By integrating advanced features, including cross-device functionality, real-time capabilities, AIGC technologies, and more, we continue to refine our product's interface and functionality.

To refine our product interface and functionality, we leverage advanced technologies to empower product innovation Catherine two diverse user needs. Meanwhile, we in Denver, Jean Hu of user experience user engagement by enhancing the network effect of our offerings there.

Speaker 2: We leverage advanced technologies to empower product innovation catering to diverse user needs. Meanwhile, we endeavor to improve user engagement by enhancing the network effect of our offerings, thereby fostering organic user engagement.

By fostering organic user growth.

I'll get organizational wise as we continued to boost our localization capabilities across product development operations and the other key areas. We have also taken a collaborative cross team approach to product innovation to increase innovative productivity moving forward.

Speaker 2: organizational-wise as we continue to boost our localization capabilities across product development operations and other key areas.

Speaker 2: We have also taken a collaborative cross-team approach.

Speaker 2: to increase innovative productivity. Moving forward, we will continue developing international markets.

We will continue developing international markets, reinforcing globalization capabilities and ultimately accelerating the expansion of our global footprint.

Speaker 2: reinforcing globalization capabilities and ultimately accelerating the extension of our global footprint.

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Speaker 3: In terms of technical development, we continue to strengthen our core technical self-disclosure capabilities.

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Speaker 3: to provide more customized support for the product, reinforce product innovation, and facilitate global business development.

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Speaker 3: In terms of innovative business layout, we continue to deepen the integration and construction of multi-modal AIGC technical capabilities. Based on the training of emotional reinforcement models, we optimize algorithms.

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Speaker 3: We have also made breakthrough progress in AI fitness technology.

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Speaker 3: At the same time, we have continued to improve the quality of message transmission on the IMTC voice communication platform Wodas. We provide high-performance, low-delay, and expandable customized information and communication support for the business.

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Speaker 3: Smart data analysis and data management systems apply AI technology to the field of market marketing to effectively promote overall efficiency of operations.

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With respect to a technological advancement, we continue to strengthen our R&D capabilities to provide more customized product support. These in turn empowers product innovation and drive progress across our global business. We have also consistently.

Speaker 2: With respect to technological advancement, we continue to strengthen our R&D capabilities to provide more customized product support. This, in turn, empowers product innovation and drives progress across our global business. We have also consistently deepened the integration and development of multi-model AIGC technologies into our innovative business framework.

<unk> deepened the integration and development of multi model AIG C technologies into our innovative business from a work through.

So a motion has the motto training and the algorithm optimization, we are quantifying our AI SaaS unlocking vast opportunities for ongoing product innovation.

<unk> technologies, we have been constantly improving the stability and performance of automatic speech recognition and text to speech.

Syed TTS for both Chinese and English languages.

Speaker 2: adapting them for diverse scenarios. We have also achieved the breakthroughs in AI voice changing technology, including a seamless integration to .remi, our in-house RTC platform for real-time audio and video streaming.

Adapting them for diverse scenarios. We have also achieved the breakthroughs in AI voice changing technology, including seamless integration to Dot Remy our in house RTC platform for real time audio and video streaming.

Speaker 2: In the meantime, we further enhance the quality of information transmission on our IM platform, VoterX, empowering our business with high performance, low latency, and scalable customized instant messaging capabilities.

In the meantime, we further enhanced the quality of information transmission on our.

Pass on border ex empowering our business with high performance low latency and a scalable customize the instant messaging capabilities.

In terms of our wasn't higher technology path on the construction. We further improved the data analytics and data management systems, and applied AI technology to marketing and other fields.

Speaker 2: In terms of our versatile technology platform construction, we further improved the data analytics and data management systems and applied AI technology to marketing and other fields.

Speaker 2: Collectively, these initiatives have improved overall operating efficiency. In general, we believe technological advancements are the cornerstone of business development.

Collectively these initiatives to have an improved overall operating efficiency in general we believe technological advancements are the cornerstone of business development will remain committed to pursuing industry, leading technological standards and the continually fortifying our core technological capabilities.

Speaker 2: We remain committed to pursuing industry-leading technological standards and continuing fortifying our core technological capabilities to empower the business.

To empower the business development.

Speaker 3: We are very happy to announce that last month, our company has

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Speaker 3: China's top 100 Internet-compatible business lists.

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Speaker 3: This also means that learning and the industry's recognition of the group's comprehensive ability.

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Speaker 3: in the development of a more competitive business ecosystem and continue to improve and improve our brand. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.

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Speaker 3: At the same time, we will also refine operations to improve the effectiveness of resource configuration and to contribute more to the long-term sustainable development of the company.

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We are delighted to announce that last month. The company was allotted as one of China's top Hunter Internet companies by their Internet Society of China. This marks the fifth consecutive year that we have received this honor representing powerful recognition of our comprehensive because of Brexit.

It is by the Internet Society of China, and the broader industry.

Speaker 2: Going forward, despite the macro challenges, we will spare no effort in proactively refining our business strategies and building a more competitive ecosystem. We will continue to improve our core technology capabilities while also adopting and more deeply integrating AIGC and voice AI technologies throughout the business.

Going forward. Despite the macro challenges, we will spare no effort in pro actively refining our business strategies and building a more competitive vehicle system. We will continue to improve our core technology capabilities, while also adopting and more deeply integrating aig's zee and <unk>.

Technologies throughout the business.

Speaker 2: Meanwhile, we will further streamline our operations and improve the effectiveness of resource allocation, propelling the company's long-term sustainable development with fresh momentum.

Meanwhile, we will further streamline our operations and improve the effectiveness of risotto location propelling the companys long term sustainable development with fresh momentum.

Speaker 3: Thank you, everyone. Next, I would like to invite our CFO , Ms. Lu Chengfang, to introduce the financial side of the business to us.

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Thank you all with that I will now turn the call over to our acting CFO Ms. <unk>, Lu who will discuss our financial results in more detail.

Speaker 2: Thank you all. With that, I will now turn the call over to our Acting CFO , Ms. Chen Fanglu, who will discuss our financial results in more detail.

Okay. Thank you, Michael and Hello, everyone I'll, let revenues in the third quarter opportunity phase III.

Speaker 4: Okay, thank you, Marco. And hello, everyone. Online revenues in the third quarter of 2023 will be 425.1 million.

Paul Hunter and $25 1 million, despite the complex backdrop and market uncertainties and protected we remain steadfast and threatening our call competitively through technological innovation during the quarter moving.

Speaker 4: Moving forward, we remain committed to further enhancing organizational efficiency, developing globalization capability, and enhancing overall agility. Position us to deliver enduring value to our state holders.

Moving forward, we remain committed to further.

Organizational efficiency developing globalization capability.

Overall agility position us to deliver enduring value to our stakeholders.

Speaker 4: Now I'd like to provide a brief overview of our financial results for the third quarter of 2023.

Now I'd like to provide a brief overview of our financial results for the third quarter of 2023.

Speaker 4: In this quarter, our total net revenues will be $425.1 million, compared with $565.2 million in the same period of last year.

In this quarter. Our total net revenues were RMB $425 1 million compared with RMB $565 2 million in the same period of last year.

Speaker 4: primarily due to the decline in average pain users and user spending on our audio entertainment products.

Primarily due to the decline in average paying users and user spending all our audio entertainment products.

Speaker 4: Cost of revenue was RMB317.3 million in this quarter, compared with RMB376.2 million in the same period of last year, mainly attributable to the decreased revenue sharing fees, share-based compensation expenses, payment handling costs, and other miscellaneous costs.

Cost of revenue was RMB $317 3 million like in this quarter compared with RMB $376 2 million in the center of last year.

Mainly attributable to the decreased revenue share of fees share based compensation expenses <unk> costs and other miscellaneous costs.

Speaker 4: Gross profit was RMB107.8 million in the third quarter of 2033, compared with RMB189.1 million in the same period of last year.

Gross profit was RMB weyerhaeuser out of $7 8 million in the third quarter up 23, three compared with RMB $189 1 million in the same period of last year.

non-GAAP gross profit was RMB Weyerhaeuser as Devon lamina in this quarter, coupled with the Weyerhaeuser 11 8 million in the same period of last year.

Speaker 4: Long-gap gross profit was RMB107.9 million in this quarter compared with RMB190.8 million in the same period of last year.

Gross margin in this quarter of 2033 was 20 by compared was 33% of last year lock up gross margin in this quarter was 25% copper was 34% in the center of last year.

Speaker 4: Operating expenses were RMB167.9 million in the third quarter of 2023, compared with RMB156.6 million in the same period of last year.

Operating expenses were RMB Weyerhaeuser 57, laminate in the third quarter of 2023, compared with RMB Weyerhaeuser at $56 6 million in a sector of last year.

Speaker 4: Research and development expenses were RMB 83.8 million in the third quarter of 2023, representing an increase of 7% year-over-year. Primary due to the increased salary and welfare benefits expenses relate to increased severance pay to optimize the R&D efficiency.

Research and development expenses were RMB $83 8 million in the third quarter of 2023.

Any increase of 7% year over year.

Primarily due to the increased salary and welfare benefits expenses.

Two increased severance pay to optimize the R&D efficiency.

Speaker 4: Partially offset by the decreased expenses related to research and development services provided by third parties.

Partially offset by the decrease expenses related to research and development services provided by third parties.

Speaker 4: Selling and marketing expenses were RMB59.1 million in this quarter, compared with RMB71.2 million in the same period of last year.

Selling and marketing expenses were RMB $59 1 million in this quarter compared with RMB $71 2 million scepter of last year.

Speaker 4: primarily attributable to decreased branding and marketing expenses.

Primarily attributable to decreased branding and marketing expenses.

Speaker 4: The company will monitor its discretionary advertising and promotion expenses and adjust accordingly depending on marketing conditions.

The company will monitor discretionary advertising and promotion expenses adjusted coordinate depending on market conditions.

General and administrative expenses were RMB 25, 1 million in the third quarter of 2023, compared with RMB $207 1 million in the center of last year.

Speaker 4: General and administrative expenses were on B25.1 million in the third quarter of 2023. Complan with on B27.1 million in the same period of last.

Many driven by decreased professional service fees provided by third parties probation for litigation contingencies and other miscellaneous expenses.

Speaker 4: many driven by decreased professional service fees provided by third parties, probation for litigation contingencies, and other miscellaneous expenses.

Operating loss was RMB 51 million in the third quarter of 2023.

Speaker 4: Operating loss was RMB60.1 million in the third quarter of 2023, compared with operating income of RMB12.5 million in the same period of last year.

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Speaker 4: Lungcap operating loss was RMB 55 million in less quarter. Compare with Lungcap operating income of RMB 20.2 million in the Lungcap operating income of RMB 20.2 million in the

non-GAAP operating operating loss was RMB 55 million in this quarter compared with non-GAAP operating income of RMB 22 million in the center of last year.

Speaker 4: Other expenses will be 5.5 million in the third quarter of 2023, compared with other income of R&B 1.7 million in the sample of last year. Many attributes go to the remuneration fees to the depositives back, in relation to the racial change of ADF on September 20, 2023.

Other expenses were RMB five 9 million in the third quarter of two new phase III compared with other income of RMB, one 7 million in the center of last year.

Mainly attributable to the remuneration phase two the day positive back in really in relation to the ratio change of ADF September 22023.

Speaker 4: Net loss was RMB62 million in the third quarter of 2023, compared with net income of RMB19.8 million in the same period of last year.

Net loss was RMB 62 million in the third quarter of 2023, compared with net income of RMB 19, 8 million in the center of last year.

Speaker 4: Non-cabinet loss was RMB56.7 million in this quarter compared with non-cabinet income of RMB27.5 million in the same period of last year.

non-GAAP net loss was RMB $56 5 million in this quarter compared with non-GAAP net income of RMB 27, five data center of last year.

Speaker 4: Basic and dilutive net loss per ADS were both 11.01% in the third quarter of 2033, compared with basic and dilutive net income of RMB 3.81 and 3.79 per ADS in the same period of last

Basic and diluted net loss per ads were both 11 ports that are why we are so caught up to me 33, compared with basic and diluted net income of RMB three one and three point 70 library asking the centre of last year.

non-GAAP basic and diluted net loss per ads were both RMB 10, seven in the third quarter of 2023, coupled with non-GAAP basic and diluted net income of <unk> five point.

Knight as bio plastics for Adi in the center of last year.

Speaker 4: As of September 30, 2023, we have cash and cash equivalents, and we've shifted cash of R&B 6-hounder and 15.8 million.

As of September 32023, we had cash and cash equivalents and restricted cash of RMB six counter at $15 8 million.

Speaker 4: Okay, this concludes all of our prepared remarks.

Okay. This concludes all of our prepared remarks.

Speaker 4: Thank you once again for joining us today. If you have further questions, please feel free to contact these investor relations through the content information provided on our website, I add a list to FM, or Piancess Financial Communication.

Thank you. This concludes the conference call you May now disconnect. Your lines. Thank you have a good day.

Speaker 1: Thank you. This concludes the conference call. You may now disconnect your line. Thank you. Have a good.

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